Brimstone Resources Ltd v Empire Resources Ltd
[2018] WASCA 107
•28 JUNE 2018
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
TITLE OF COURT : THE COURT OF APPEAL (WA)
CITATION: BRIMSTONE RESOURCES LTD -v- EMPIRE RESOURCES LTD [2018] WASCA 107
CORAM: MITCHELL JA
BEECH JA
HEARD: 26 JUNE 2018
DELIVERED : 26 JUNE 2018
PUBLISHED : 28 JUNE 2018
FILE NO/S: CACV 60 of 2018
BETWEEN: BRIMSTONE RESOURCES LTD
Appellant
AND
EMPIRE RESOURCES LTD
Respondent
ON APPEAL FROM:
Jurisdiction : SUPREME COURT OF WESTERN AUSTRALIA
Coram: SMITH J
Citation: BRIMSTONE RESOURCES LTD -v- EMPIRE RESOURCES LTD [2018] WASC 185
File Number : CIV 1959 of 2018
Catchwords:
Practice and procedure - Application for injunction pending determination of appeal from order refusing interlocutory injunction - Whether secured creditor should be restrained from enforcing security until cross-claim is resolved - Whether new point may be raised on appeal - Operation of 'no set-off' clause - Whether payment of disputed debt into court would be an appropriate condition to the grant of any injunctive relief
Legislation:
Nil
Result:
Application dismissed
Category: B
Representation:
Counsel:
| Appellant | : | Mr G R Donaldson SC & Mr J C Yeldon |
| Respondent | : | Mr W J C Zappia |
Solicitors:
| Appellant | : | Chris Stokes & Associates |
| Respondent | : | HWL Ebsworth Lawyers |
Case(s) referred to in decision(s):
George 218 Pty Ltd v Bank of Queensland Ltd [2015] WASC 434; (2015) 303 FLR 231
House v The King (1936) 55 CLR 499
Inglis v Commonwealth Trading Bank of Australia (1971) 126 CLR 161
LPH Developments Pty Ltd v Jameson Moore Pty Ltd [2018] WASCA 95
McLennan v McCallum [2010] WASCA 45
Mineralogy Pty Ltd v Sino Iron Pty Ltd (No 2) [2017] WASCA 76
Mineralogy Pty Ltd v Sino Iron Pty Ltd [2016] WASCA 105
Mostert v Durban Roodepoort Deep, Ltd [2004] WASCA 309
Oswal v Commonwealth Bank of Australia [2013] WASCA 58
Palaniappan v Westpac Banking Corporation [2016] WASCA 72
Saldanha v City of Belmont [2018] WASCA 7
Saunders v The Public Trustee [2015] WASCA 203
Sovereign Grange Pty Ltd v A V Truck Services Pty Ltd (No 2) [2017] WASCA 142
Twinside Pty Ltd v Venetian Nominees Pty Ltd [2008] WASC 110
Welldog Pty Ltd v Prox Pty Ltd [2017] WASCA 62
REASONS OF THE COURT:
At the conclusion of the hearing of the appellant's application in this appeal (Application) on 26 June 2018, we made the following orders:
(1)The application in an appeal dated 18 June 2018 is dismissed.
(2)Order 1 of the orders made by Mitchell JA on 18 June 2018 is discharged.
(3)The appellant is to pay the respondent's costs of the application in an appeal to be assessed if not agreed.
These are our reasons for making those orders.
Introduction
The appellant (Brimstone) and respondent (Empire) are joint venture partners who respectively own 40% and 60% shares in mining tenements on which a gold deposit known as Penny's Find is located. They are in dispute as to amounts payable under the relevant joint venture agreements.
There is no doubt that the relevant agreements require Brimstone to pay an 'Agreed Expenditure Amount' in full by the 'Open Cut Completion Date'. The primary judge found that the Open Cut Completion Date is 6 June 2018. It was common ground that the Agreed Expenditure Amount (claimed by Empire to be $1,012,238.08) had not been paid in full by 6 June 2018 or at all, although there is a dispute as to the amount that is due. There is no doubt or dispute that payment of the Agreed Expenditure Amount is secured by a mortgage in favour of Empire of Brimstone's interest in the mining tenements, a security interest over Brimstone's personal property and a fixed charge over certain other property.
On 6 June 2018, Brimstone commenced proceedings by Writ in the General Division of this court seeking, relevantly:
(1)specific performance of the relevant agreements;
(2)an order for an account to be taken of revenue and expenditure associated with relevant mining operations;
(3)an order that Empire pay Brimstone such amount as may be found to be due upon the taking of the account; and
(4)an injunction restraining Empire from exercising its rights under the security instruments until an account is taken and the dispute resolved.
By way of amended chamber summons filed 6 June 2018, Brimstone also applied for interlocutory orders for the taking of an account and an interlocutory injunction restraining Empire from exercising its rights under the security instruments until further order.
On 18 June 2018, the primary judge dismissed Brimstone's interlocutory application for reasons which her Honour published on 20 June 2018.[1] In essence, the primary judge found that Brimstone had not demonstrated that there was a prima facie case for relief, with the consequence that it was unnecessary for her Honour to consider the balance of convenience. The primary judge noted that, had she found a prima facie case to exist, she would have ordered Brimstone to pay the disputed balance of the Agreed Expenditure Amount of $1,012,238.08 into court as a condition for the grant of any interlocutory injunction.
[1] Brimstone Resources Ltd v Empire Resources Ltd [2018] WASC 185 (Primary decision).
Also on 18 June 2018, Brimstone commenced an appeal in this court against the orders of the primary judge dismissing its interlocutory application. By its Application filed on the same day, Brimstone seeks an injunction restraining Empire from exercising its rights under various security instruments until further order. The Application was called on urgently on 18 June 2018, and orders (including an interim injunction operating until 4.30pm on 26 June 2018) were made to enable the Application to be heard on 26 June 2018.
Brimstone has filed draft grounds of appeal, for the purposes of assisting the court to consider the Application. Brimstone contends that the primary judge erred in finding that the evidence before the primary court did not give rise to there being a serious question to be tried. Brimstone also contends that the primary judge erred by not considering whether convenience favoured the granting of the claimed interlocutory relief.
General principles
The relevant general principles are well established and are not in dispute. The principles governing the grant of interlocutory injunctive relief at first instance are summarised by Beech J in Twinside Pty Ltd v Venetian Nominees Pty Ltd,[2] by Newnes JA in Mineralogy Pty Ltd v Sino Iron Pty Ltd,[3] and by this court in Mineralogy Pty Ltd v Sino Iron Pty Ltd (No 2).[4] It is established that an appeal from a discretionary decision to grant or refuse an interlocutory injunction must demonstrate an error of the kind referred to in House v The King.[5]The principles governing the grant of an injunction pending the determination of an appeal are summarised in Welldog Pty Ltd v Prox Pty Ltd.[6] The principles governing the grant of leave to appeal from an interlocutory order are summarised in LPH Developments Pty Ltd v Jameson Moore Pty Ltd.[7] We adopt the summaries referred to above without repeating them.
[2] Twinside Pty Ltd v Venetian Nominees Pty Ltd [2008] WASC 110 [7] - [11].
[3] Mineralogy Pty Ltd v Sino Iron Pty Ltd [2016] WASCA 105 [87].
[4] Mineralogy Pty Ltd v Sino Iron Pty Ltd (No 2) [2017] WASCA 76 [130] - [131].
[5] House v The King (1936) 55 CLR 499, 504 - 505; Mineralogy (No 2) [125].
[6] Welldog Pty Ltd v Prox Pty Ltd [2017] WASCA 62 [29] - [38].
[7] LPH Developments Pty Ltd v Jameson Moore Pty Ltd [2018] WASCA 95 [20].
Brimstone's contentions on the Application
At the hearing of the Application, senior counsel for Brimstone identified three matters about which there Brimstone contends there is a serious question to be tried. Brimstone contends that:[8]
(1)The Open Cut Completion Date has not yet occurred, with the consequence that the time for repayment of the Agreed Expenditure Amount in full has not yet arrived.
(2)The outstanding balance of the Agreed Expenditure Amount as at 6 June 2018 was no more than $800,000, as opposed to the sum of $1,012,253.08 claimed by Empire.
(3)The relevant agreements required Empire to distribute to Brimstone an amount of about $940,000 as at 6 June 2018, and it had not done so. Had that distribution occurred, Brimstone would have repaid the Agreed Expenditure Amount and the securities held by Empire to secure repayment would have been discharged.
[8] Appeal ts 19 - 20.
Senior counsel submitted that there was a serious question to be tried as to all three points, and that the balance of convenience favoured the grant of an injunction pending the determination of the appeal. However, he accepted that the second point identified above, standing on its own, could not sustain the grant of injunctive relief.[9]
[9] Appeal ts 34 - 35.
It is convenient to begin by considering the nature of Empire's rights under the joint venture agreements, and whether any of the points identified at [10] above arguably operate to deny Empire the right to enforce its securities. In summary, we are of the view that the primary judge's finding that the Open Cut Completion Date is 6 June 2018 cannot be impugned in the appeal. We are also of the view that the second and third points, if established, would not deny the right of Empire to enforce its securities.
Secured obligation to pay the Agreed Expenditure Amount
Clause 3 of the Amending Agreement
The agreements and their most relevant provisions were identified by the primary judge.[10]
[10] Primary decision [5] - [17], [38].
The central terms for present purposes are clauses 3.1 - 3.3 of the Amending Agreement,[11] which provide as follows:
[11] Penny's Find Mining Joint Venture Amending Agreement dated 16 August 2017 (Annexure PW-4 to the affidavit of Paul Williams sworn in the primary proceedings on 6 June 2018).
3.1 Expenditure incurred
Brimstone acknowledges and agrees that the Agreed Expenditure Amount is comprised of:
(a)expenditure that [Empire] has expended or incurred on behalf of Brimstone being as at 30 June 2017 $828,000.00; and
(b)further costs and expenses [Empire] as Manager will incur on behalf of the Joint Venture including:
(i)Direct Costs as defined in schedule 3 of the Mining JVA;
(ii)Manager Costs as defined in the Mining JVA; and
(iii)legal fees in respect to the Project Agreements, the operation of the Joint Venture and other related matters;
(c)any other cost or expense payable by the Manager on behalf of Brimstone in accordance with the Project Agreements and other agreements relevant to development of the Mine; and
(d)interest under clause 3.3.
3.2 Reimbursement of Agreed Expenditure Amount
The Agreed Expenditure Amount is to be paid to [Empire]:
(a)by the payment of $200,000 by Brimstone to [Empire] receipt of which is acknowledged by [Empire]; and
(b)the balance from revenue from the Mine in priority to payments to Brimstone in accordance with paragraph 10.1(a)11 of the Funding Agreement provided that:
(i)no reimbursement of the Agreed Expenditure Amount is made from the monies payable to Brimstone pursuant to paragraph 10.1(a)6 of the Funding Agreement;
(ii)Brimstone shall receive $140,000 of the $350,000 payable to the Participants pursuant to paragraph 10.1(a)6 of the Funding Agreement; and
(iii)only fifty per cent (50%) of the monies payable to Brimstone pursuant to paragraph 10.1(a)11 of the Funding Agreement is payable in reimbursement of the Agreed Expenditure Amount,
provided that the Agreed Expenditure Amount must be repaid by Brimstone to [Empire] in full by the Open Cut Completion Date.
3.3Interest
(a)Any part of the Agreed Expenditure Amount which has not been reimbursed to [Empire] bears interest from the date of payment by [Empire] at the rate of 16% per annum (on the basis of a 365 day year), calculated daily on the outstanding balance and compounded monthly.
(b)The Participants acknowledge and agree that as at 30 June 2017 the outstanding amount of interest owing in respect of the Agreed Expenditure Amount is $55,821.12.
Clauses 3.4 - 3.5 of the Amending Agreement provide for security to be provided by Brimstone for the due and punctual payment of the Agreed Expenditure Amount.
The primary judge found that there was no doubt that cl 3.2 provided for:
(1)a credit for the past payment referred to in cl 3.2(a);
(2)further payments to be made from the revenue received from the sale of refined metals in clause 3.2(b)(i) - (iii) (read with cl 10 of the Funding Agreement[12]); and
(3)by a final overriding proviso to cl 3.2(b)(i) - (iii), the balance of the Agreed Expenditure Amount to be paid in full once the Open Cut Completion Date occurred.
The primary judge found that Brimstone's obligation under the final overriding proviso to pay the balance of the Agreed Expenditure Amount in full by the Open Cut Completion date is unconditional and is not limited to the proceeds of the sale of the refined metals from the open cut mining campaigns.[13]
[12] Funding Agreement Penny's Find Gold Project dated 16 August 2017 (annexure PW-3 to the affidavit of Paul Williams sworn in the primary proceedings on 6 June 2018).
[13] Primary decision [94].
Senior counsel for Brimstone indicated that the correctness of the primary judge's construction of cl 3.2 was not accepted, but only 'faintly'.[14] The written and oral submissions advanced by Brimstone on the Application do not advance any arguments against the primary judge's conclusion as to the operation of cl 3.2. We do not regard the primary judge's conclusion as open to any doubt.
[14] Appeal ts 21.
That is, plainly the relevant agreements unconditionally provide for Brimstone to repay the Agreed Expenditure Amount in full by the Open Cut Completion Date.
Open Cut Completion Date
The term 'Open Cut Completion Date' is defined by cl 1.1 of the Amending Agreement in the following terms:
Open Cut Completion Date means the date 21 days after the last delivery of Project Dore (as defined in the Funding Agreement) is made to the [Perth Mint].
The Funding Agreement defines 'Project Dore' to mean the total unrefined product produced by the Gold Processing Plant from Ore. 'Ore' is defined to mean the gold bearing material extracted from the Mine at the Tenements.
The primary judge found that the Open Cut Completion Date is 6 June 2018.[15] That finding was based on the unchallenged evidence of Mr David Sargeant, a director of Empire, that the last delivery of Project Dore was made to the Perth Mint on 15 May 2018.[16] Before the primary judge, counsel for Brimstone expressly accepted that there was no dispute about the Open Cut Completion Date.[17] It followed from this finding that the Agreed Expenditure Amount was payable in full by 6 June 2018. The written submissions filed by Brimstone in the appeal on 21 June 2018 did not challenge that finding.
[15] Primary decision [18].
[16] Paragraph 17 of the affidavit of David Wesley Sargeant sworn in the primary proceedings on 11 June 2018.
[17] Primary ts 10.
By affidavit sworn on 21 June 2018 by Mr Paul Williams, Brimstone's managing director, and by an 'Additional Note' emailed to the court on 25 June 2018, Brimstone seeks to contend that, contrary to the common position in the primary proceedings, the Open Cut Completion Date has not yet arrived.
The new argument which Brimstone seeks to introduce concerns a dispute between Brimstone and Empire, on the one hand, and Eastern Goldfields Milling Services Pty Ltd (Eastern Goldfields), on the other. Brimstone and Empire contracted with Eastern Goldfields to treat the ore from the mine and deliver treated Project Dore to the Perth Mint.[18] In his affidavit filed on 21 June 2018, Mr Williams describes the dispute in the following terms:[19]
Brimstone and Empire have been in dispute with [Eastern Goldfields] over recovery from [Eastern Goldfields] of approximately $1 million in gold … That disputed amount comprises 699 ounces of gold still in circuit in the [Eastern Goldfields] mill that still needs to be poured. The 699 ounces comprises the 384 ounces [Eastern Goldfields] has already agreed is gold in circuit not delivered and 315 ounces of gold in circuit in dispute.
[18] Primary decision [17].
[19] Paragraph 30.
Brimstone seeks to contend that this gold in circuit is undelivered Project Dore for the purposes of the Amending Agreement. Brimstone seeks to contend that, until the gold in circuit is delivered to the Perth Mint, the Open Cut Completion Date has not arrived and thus the Agreed Expenditure Amount is not due and payable.
For the following reasons, it is not open to Brimstone in this appeal to impugn the primary judge's finding that the Open Cut Completion Date is 6 June 2018.
Firstly, the proposed new contention does not relate to any of the proposed grounds of appeal. Draft ground of appeal 1 contends that the primary judge 'erred in fact and law by finding that the evidence before the court did not give rise to there being a serious question to be tried'. As senior counsel for Brimstone accepted,[20] the primary judge cannot be said to have erred in making a finding based on evidence before the primary court which was expressly not disputed.
[20] Appeal ts 24 - 25, 26.
Senior counsel accepted that the proposed new contention could only be relevant on appeal if this court found that the primary judge had made an error of principle and came to re-exercise the discretion to grant or refuse an interlocutory injunction pending determination of the primary proceedings.[21] That point would only be reached if some arguable material error by the primary judge were to be established. By itself, the proposed new contention cannot support the grant of an injunction pending the determination of the appeal. Further, even if that point were reached, Brimstone would still face the difficulty that its statement of claim does not plead a case that payment of the Agreed Expenditure Amount in full is not yet due because the Open Cut Completion Date has not arrived.
[21] Appeal ts 24 - 25.
As senior counsel for Brimstone noted,[22] the statement of claim can be amended. However, the current state of the draft grounds of appeal and primary court pleadings do not support the grant of an injunction by this court pending determination of the appeal on the basis of Brimstone's contention that the Open Cut Completion Date has not occurred.
[22] Appeal ts 26.
Secondly, the proposed new contention was not a point taken before the primary judge, and is not a new point which Brimstone should be allowed to raise on appeal. Further, the proposed new contention relies on the grant of leave to adduce additional evidence on appeal, and, for the reasons set out below, Brimstone has not established grounds for a grant of leave.
The limits on raising new points on appeal are well established. As this court noted in Saldanha v City of Belmont:[23]
The appellants are bound by the conduct of their case below. Except in the most exceptional circumstances, it would be contrary to all principle to allow a party, after a case has been decided against her, to raise a new argument which, whether deliberately or through inadvertence, she failed to put during the trial when she had an opportunity to do so. In particular, a point cannot be raised for the first time on appeal if, as here, it could possibly have been met by calling evidence below. (citations omitted)
[23] Saldanha v City of Belmont [2018] WASCA 7 [123].
In this case, the point could possibly have been met by calling evidence, as is illustrated by the affidavit of Mr Jonathan Shepherd sworn on 25 June 2018. Mr Shepherd deposes that the toll milling agreement with Eastern Goldfields was terminated and the last delivery of Project Dore from the Eastern Goldfields campaign was sometime in January 2018. He deposes that, if Empire, on behalf of the joint venture, decides to pursue Eastern Goldfields for undelivered gold, the claim will be one of damages rather than delivery of the missing gold. Mr Shepherd's evidence is that there are no further deliveries of Project Dore from Eastern Goldfields to the Perth Mint left to be made.[24]
[24] Paragraph 7.
In McLennan v McCallum,[25] Buss JA, with whom the other members of the court agreed, observed that the juridical basis of these rules derives, in part, from public policy considerations directed to ensuring finality in litigation and, in part, from the doctrine of estoppel by election in the conduct of litigation. Considerations of finality apply with less force in the case of an appeal from an interlocutory order, but remain relevant.[26] The significance of election as a relevant consideration also remains.
[25] McLennan v McCallum [2010] WASCA 45 [87]. To similar effect see Mostert v Durban Roodepoort Deep, Ltd [2004] WASCA 309 [52] - [55].
[26] See, in the context of an application to adduce additional evidence, Sovereign Grange Pty Ltd v A V Truck Services Pty Ltd (No 2) [2017] WASCA 142 [44] - [47].
Senior counsel for Brimstone put his argument for the admission of additional evidence in the appeal, and for Brimstone to be permitted to raise the proposed new contention, on the basis that the evidence on which the proposed new contention is based was fresh evidence not available to Brimstone on the application before the primary judge. [27] Senior counsel effectively accepted that Brimstone would 'struggle' with the proposed new contention if the evidence were not fresh.[28] We accept that concession, but do not accept that the new evidence is properly characterised as fresh.
[27] Appeal ts 26, 28.
[28] Appeal ts 29.
The principles relevant to this court's discretionary power to admit additional evidence were outlined in Saunders v The Public Trustee.[29]
[29] Saunders v The Public Trustee [2015] WASCA 203 [84] - [90].
Contrary to the submissions advanced by Brimstone at par 3 of the 'Additional Note', the evidence not adduced in the primary proceedings was not exclusively in the possession of Empire. In par 47 and par 64 of his affidavit of 6 June 2018, Mr Williams referred to the dispute with Eastern Goldfields over approximately $1 million. The effect of the additional evidence sought to be adduced on appeal is that the dispute concerned a contention that Eastern Goldfields had not delivered to the Perth Mint all Project Dore extracted from ore delivered from Penny's Find. Brimstone was aware of the nature of that dispute at all material times. Brimstone's statement of claim in the primary proceedings described the dispute with Eastern Goldfields as comprehending:[30]
[T]he amount of Project Dore delivered by [Eastern Goldfields] to the Perth Mint and the amount payable by [Eastern Goldfields] in respect of the final gold in circuit calculation to be carried out pursuant to the [Eastern Goldfields] Toll Milling Agreement. (emphasis added)
[30] Par 17 of the Statement of Claim (emphasis added).
In addition, Mr Williams attended a number of Management Committee Meetings, the minutes of which were in evidence before the primary judge, at which the nature of the dispute with Eastern Goldfields was discussed.[31] Importantly, Mr Williams does not depose that he arrived at his understanding of the nature of the dispute, set out at [23] above, at a point in time after the hearing before the primary judge.
[31] Affidavit of David Wesley Sargeant sworn in the primary proceedings on 11 June 2018, annexure DWS6, pages 136, 144, 152 - 153.
The only additional information which Brimstone claims to have obtained after the hearing before the primary judge are accounts which attribute a value to the amount of '[g]old in circuit'.[32] The attribution of a value to the amount of gold in circuit, somewhat different from the approximately $1 million previously estimated by Brimstone, does not materially affect the substance of the proposed new contention.
[32] Annexure PW-32 to the affidavit of Paul Williams sworn 21 June 2018 (page 9, items 1-6200 and 1-6250) and annexure DWS10 to the affidavit of David Wesley Sargeant sworn 22 June 2018 (page 22, items 1-6200 and 1-6250). See appeal ts 28 - 29.
We are satisfied that the fact that the dispute with Eastern Goldfields concerned gold said to be left 'in circuit' and not delivered to the Perth Mint was well known to Brimstone at the time of the hearing before the primary judge. In that context, it may be inferred that Brimstone made a conscious decision not to contest the evidence that the Open Cut Completion Date is 6 June 2018. In the circumstances, it should not be permitted to raise the proposed new contention on appeal, or adduce additional evidence on appeal in support of that contention. For these reasons, we would uphold Empire's objections to the admission of paragraphs 3 - 9 and 28 - 33 of Mr Williams' affidavit sworn 21 June 2018, on the ground that the evidence was not before the primary court, the issue was not in dispute before the primary court, and there is no basis to grant leave to adduce additional evidence.
Thirdly, even if Brimstone were permitted to raise the proposed new contention on appeal and adduce evidence in support of it, the claim that the Open Cut Completion Date has not arrived is without merit. The affidavits clearly show that the parties are in dispute with Eastern Goldfields over undelivered gold. However, nothing in the affidavits raises any doubt that the last delivery of Project Dore by Eastern Goldfields to the Perth Mint has occurred, and any resolution of the dispute with Eastern Goldfields will not involve further delivery of Project Dore sourced from the open cut of Penny's Find. There is no basis for doubting the evidence of Mr Sargeant in the primary proceedings and Mr Shepherd on appeal that the last delivery of Project Dore has been made to the Perth Mint. The evidence sought to be adduced on appeal does not disclose any basis for doubting the correctness of the primary judge's finding that the Open Cut Completion Date is 6 June 2018.
That conclusion is not altered by the contention that there was an alleged failure by Eastern Goldfields to deliver all unrefined product produced by the Gold Processing Plant from gold bearing material extracted from the Mine at the Tenements. The agreements cannot reasonably be construed as excusing Brimstone from repaying the Agreed Expenditure Amount if some portion of the Project Dore is lost or misappropriated. Such a construction would be plainly uncommercial, and is inconsistent with the contractual terms. The only reasonable construction of the reference to the 'last delivery of Project Dore' in the definition of 'Open Cut Completion Date' is that it is referring to the last occasion on which Project Dore is delivered, which, on the uncontested evidence, occurred on 15 May 2018. It is immaterial that not all Project Dore has been delivered. Clause 3.2 of the Amending Agreement operates by reference to the last delivery of Project Dore, rather than by reference to whether all Project Dore was delivered. Senior counsel for Brimstone did not seek to advance an alternative construction on the Application.[33]
[33] Appeal ts 33.
The definition of 'Open Cut Completion Date' is concerned with the date on which Project Dore is last delivered to the Perth Mint, rather than the date on which payment for Project Dore is received. Brimstone's submission that payment for the undelivered Project Dore has not been received[34] provides no basis for doubting that the Open Cut Completion Date is 6 June 2018.
[34] Appeal ts 31.
For these reasons, the Application is to be determined on the basis that Brimstone cannot impugn the primary judge's finding that the Open Cut Completion Date is 6 June 2018. In any event, even if the material relied on by Brimstone is received, there is no basis for doubting that finding.
Outstanding payment
Brimstone does not contend that it paid the Agreed Expenditure Amount in full by 6 June 2018. Rather, it challenges Empire's calculation of the outstanding balance of the Agreed Expenditure Amount, on the basis that the calculation of interest does not take account of the credit referred to in cl 3.2(a) of the Amending Agreement.[35] However, Brimstone does not challenge the primary judge's finding that the only payments made were on 18 May 2018 and 6 June 2018 in an amount totalling $320,000.[36] Brimstone accepts that an amount of up to $800,000 was outstanding as at 6 June 2018, and does not contend that it paid that amount.[37] That is, it is common ground that the Agreed Expenditure Amount was not paid in full by 6 June 2018, and has not been subsequently paid in full.
[35] Appellant's submissions, par 61 - 62; appeal ts 34.
[36] Primary decision [19].
[37] Appellant's submissions [21], [62], [67]; appeal ts 20.
Brimstone's failure to repay the Agreed Expenditure Amount in full by 6 June 2018 was an Event of Default under the Security Deed,[38] which entitled Empire to exercise the enforcement rights conferred by cl 11.1 of the Security Deed. That failure was also an Enforcement Event under the Mining Mortgage,[39] which entitled Empire to exercise the enforcement rights conferred by cl 8 of the Mining Mortgage.
[38] See cl 1.1 (par (a) of the definition of 'Amount Owing' and par (c) of the definition of 'Transaction Document'), cl 4.2, cl 10.1(a) of the Security Deed dated 16 August 2017 (annexure PW-6 to the affidavit of Paul Williams sworn in the primary proceedings on 6 June 2018).
[39] See cl 1.1 (par (a) and par (c) of the definition of 'Enforcement Event', definition of 'Secured Money', par (a) and par (c) of the definition of 'Transaction Document'), cl 3.1, cl 4.1, cl 8.1(a) of the Mining Mortgage dated 16 August 2017 (annexure PW-5 to the affidavit of Paul Williams sworn in the primary proceedings on 6 June 2018).
Empire's enforcement rights were not qualified by any requirement that there be an absence of claims by Brimstone for payments due to it under the relevant agreements. Clause 4.1(c) of the Mining Mortgage provides that Brimstone must pay the Secured Money in immediately payable funds and without set-off, counter‑claim, condition or, unless required by Law, deduction or withholding. Clause 4.2(c) of the Security Deed makes the same provision in the absence of provision in the relevant Transaction Documents. Clause 16.3(a) of the Security Deed provides that all money payable by Brimstone under the deed 'must be paid in cleared funds without set-off or counter‑claim withholding or deduction for or on account of present or future taxes, charges, duties, levies or otherwise whatsoever'. Clause 13.4(b) of the Mining Mortgage provides that Brimstone must not exercise a right of set-off or counterclaim which reduces or extinguishes its obligation to pay the Secured Money.
'Suspension' clauses expressed in these terms are common in instruments of security and guarantee. It is well recognised that such clauses are enforceable and exclude set‑off or a counterclaim whether the claim arising is statutory, common law or equitable. Clauses of this kind are generally construed as meaning what they say and as precluding reliance on any claim which does not impeach the instrument itself or dispute the primary obligation. The purpose of such clauses is to prevent the commercial purpose of the instrument being defeated by an obligor raising a defence to an action to enforce the security or guarantee by way of a plea of a set‑off or counterclaim.[40]
[40] Palaniappan v Westpac Banking Corporation [2016] WASCA 72 [73] - [85], [130] - [141], [151] - [160]; Oswal v Commonwealth Bank of Australia [2013] WASCA 58 [45], [54] ‑ [55]; George 218 Pty Ltd v Bank of Queensland Ltd [2015] WASC 434; (2015) 303 FLR 231 [288] and cases there cited.
It should not be overlooked that Brimstone's claims for payments said to be due under the agreements are just that: claims. Thus, it is not, as senior counsel for Brimstone submitted, a situation where:[41]
Empire, having an obligation to pay these moneys, refuses to do so and then says 'you owe us a sum which is less than that which, if you don't pay …, we will exercise on the securities.
Whether Empire has any such obligation remains to be determined. Brimstone's claims are disputed by Empire. There is no suggestion that Empire is acting in bad faith in disputing Brimstone's claims for payments. The evident object of the suspension clauses would be defeated if payment of the Secured Money could be delayed on the basis of, and pending the determination of, a genuinely disputed claim by Brimstone for payment to it by Empire under the agreements.
[41] Appeal ts 39.
In the present case, the meaning of the suspension clauses is clear. Brimstone's claims for payments due from Empire under the relevant agreements do not impeach the suspension clauses or the instruments in which they are contained. Brimstone is clearly not entitled to deduct amounts which may be owed by Empire to it under the agreements from its repayment of the Agreed Expenditure Amount in full by the Open Cut Completion Date.
Nature of Empire's rights
For these reasons, the issues on the Application are to be approached on the basis that Empire is clearly entitled to enforce its securities by reason of Brimstone's failure to repay the Agreed Expenditure Amount in full by 6 June 2018. That entitlement exists even if Brimstone is correct in both its contentions that:
(1)the outstanding balance of the Agreed Expenditure Amount as at 6 June 2018 was less than the amount claimed by Empire; and
(2)a distribution in the amount claimed by Brimstone was due to it under the agreements.
Disposition of Application
We accept that, if an injunction is not granted pending the determination of the appeal, the appeal will be rendered nugatory so far as it challenges the primary judge's refusal to grant an interlocutory injunction. It can be anticipated that, unrestrained, Empire will take steps to enforce its security before the appeal is determined.
Of course, the appeal would not be rendered nugatory to any extent that it challenges the primary judge's decision not to make an interlocutory order for the taking of an account. Any injunction in the appeal must be based on the primary judge's refusal to grant an interlocutory injunction.
We are not satisfied that the appeal has reasonable prospects of success so as to sustain the grant of interlocutory injunctive relief to Brimstone in the primary proceedings. Any serious question to be tried which might have been established by the evidence before the primary judge could only relate to claims by Brimstone sounding in money, or the disputed outstanding balance of the Agreed Expenditure Amount as at 6 June 2018. The evidence was incapable of establishing any serious question to be tried as to Empire's entitlement to execute its security by reason of Brimstone's failure to repay the Agreed Expenditure Amount in full by 6 June 2018.
A prima facie case in relation to Brimstone's claims for payment or in relation to the outstanding balance of the Agreed Expenditure Amount could not support the grant of interlocutory injunctive relief restraining Empire from enforcing its security. That is so for the following reasons.
First, as the primary judge rightly observed,[42] the principles outlined in Mineralogy (No 2)[43] are of particular significance to this application. The question, 'does the applicant have a prima facie case?' is not asked in the abstract. The question on an application for an interlocutory injunction is whether the applicant has a prima facie case for final relief that requires and justifies protection by interlocutory injunction. Demonstration on appeal of a serious question to be tried in relation to the issues noted at [53] above would not justify the grant of an interlocutory injunction to preserve the status quo pending trial. Brimstone's claims, if made out, do not impeach and could not justify depriving Empire of its clear legal right to enforce its security on the ground that the Agreed Expenditure Amount has not been paid in full by the Open Cut Completion Date.
[42] Primary decision [27].
[43] Mineralogy (No 2) [130].
Secondly, damages are an adequate remedy for Brimstone's claims, if they were to be established. As we have said, Brimstone's pleaded claims do not impeach Empire's rights under its security, but are simply claims for an account and for payment of sums of money. It follows from this that refusal of interlocutory injunctive relief in the primary proceedings could not prejudice the grant of any relief to which Brimstone might be entitled if it ultimately made good its claims in the primary proceedings.
Thirdly, the grant of an injunction would not materially improve Brimstone's position as, in our view, the primary judge was clearly correct to observe that payment of the claimed balance of the Agreed Expenditure Amount into court would be an appropriate condition to the grant of interlocutory injunctive relief. That is, whether or not an interlocutory injunction were granted, Brimstone would be required to pay the claimed outstanding balance while the disputes as to the amount of that balance and its contractual cross-claims were resolved. Brimstone has not established any ground for departing from the general rule in Inglis v Commonwealth Trading Bank of Australia.[44]
[44] Inglis v Commonwealth Trading Bank of Australia (1971) 126 CLR 161; see Welldog [31] ‑ [37].
Fourthly, the granting of an injunction would prejudice Empire by depriving it of the rights clearly conferred by the relevant agreements to enforce the security and obtain immediate payment of the secured money.
In these circumstances, a finding by this court that the primary judge erred in concluding that Brimstone had not demonstrated an arguable claim for relief could not properly result in the grant of an interlocutory injunction until the determination of the primary proceedings. We are not satisfied that the primary judge's ultimate decision to refuse to grant an interlocutory injunction pending determination of the primary proceedings was arguably incorrect.
The considerations noted above relating to the balance of convenience also count strongly against the exercise of this court's discretion to grant an injunction pending the determination of the appeal.
Therefore, our assessment of the prospects of success of the appeal and the balance of convenience leads us to the conclusion that the injunctive relief which Brimstone seeks pending the determination of the appeal should be refused. That is so notwithstanding that refusal of an injunction in this court will render nugatory the appeal against the primary judge's refusal to grant interlocutory injunctive relief in the primary court.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
ET
RESEARCH ASSOCIATE/ORDERLY TO THE HONOURABLE JUSTICE MITCHELL28 JUNE 2018
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